Tax professionals who advise clients on judicial review of the CRA’s discretionary decisions should monitor developments in the standard of review in light of the Supreme Court of Canada’s decision in Wilson v Atomic Energy of Canada Ltd (2016 SCC 29).

In Wilson, the appellant was a non-unionized procurement specialist who worked for Atomic Energy of Canada Ltd. for four and a half years. He was dismissed in November 2009 and filed an unjust dismissal complaint under the Canada Labour Code. At issue was whether the significant severance package provided to Mr. Wilson rendered the dismissal just.

The labour adjudicator found that a severance payment did not exempt an employer from a determination with respect to whether a dismissal was just. Applying a standard of review of reasonableness, the application judge reversed the decision of the labour adjudicator, finding that the Code permitted the dismissal of non-unionized employees without cause. The Federal Court of Appeal agreed, but held that the appropriate standard of review was one of correctness.

The Supreme Court of Canada allowed the appeal and restored the decision of the labour adjudicator. The Court split 5-3 and issued several sets of reasons in its decision.

On the merits, Justice Abella wrote for the Court that the standard of review with respect to a labour arbitrator was one of reasonableness, to be assessed in the specific context under review. In this case, Justice Abella found the interpretation of the labour adjudicator was reasonable. However, Justice Abella remarked – albeit in obiter – that the line between reasonableness and correctness had begun to blur in the case law. A single standard of reasonableness, she stated, would operate to both protect deference and give effect to one correct answer where the rule of law required it. This would give effect to the different gradations of deference to be given to administrative decision makers in different contexts.

Chief Justice McLachlin and Justices Karakatsanis, Wagner and Gascon concurred with Justice Abella’s reasons and expressed appreciation for her attempt to galvanize constructive conversation about the standard of review. However, they declined to recast the standard of review. Justice Cromwell also concurred in the result, but rejected Justice Abella’s attempt to define a new framework, finding that the correctness/reasonableness distinction that emerged in Dunsmuir was still appropriate.

Justices Cote, Brown and Moldaver dissented. Agreeing with the Federal Court of Appeal, they stated that a standard of correctness applied and that the contradictions inherent in a growing body of labour decisions called for judicial clarity. Specifically, they held that “where there is lingering disagreement on a matter of statutory interpretation between administrative decision-makers, and where it is clear that the legislature could only have intended the statute to bear one meaning, correctness review is appropriate”.

What does Wilson mean for tax litigators? First, even though four members of the Court declined to overhaul the Dunsmuir framework, they lauded Justice Abella’s attempt to refine this area of law. The views expressed in the reasons indicate that the Court may be willing to revisit and clarify Dunsmuir (which also contained three sets of reasons).

Second, to the extent that members of the Court wish to supplant the Dunsmuir test with a single standard of reasonableness (containing gradients of deference), attempts to challenge the CRA’s discretionary decisions could be met with increased difficulty in the future.

The taxpayer, an individual, bought and imported vehicles using the dealer license of Coastal Collision, a local auto dealership. Both parties consulted their respective accountants, who advised the parties that Coastal Collision should collect and remit GST/HST on the auto sales.

Accordingly, in reporting periods from January 1, 2008 to June 30, 2010, Coastal Collision collected and remitted the GST/HST on all the vehicles sold in its arrangement with the taxpayer.

The CRA reassessed the taxpayer and Coastal Collision on the basis that the taxpayer was required to collect and remit GST/HST on the auto sales. The CRA reduced the GST/HST owed by Coastal Collision, and increased the taxpayer’s GST/HST owing to $46,650.84.

On October 27, 2011, the CRA refunded Coastal Collision’s overpayment, at which time the taxpayer paid a portion of his GST/HST owing, and paid the remaining amount on October 31, 2011.

The CRA assessed interest on the GST/HST assessed against the taxpayer.

The taxpayer made an application for interest relief in which he asked for cancellation of all interest accrued since 2008 except for the modest interest accrued from October 27 to 31, 2011, the period after the CRA refunded Coastal Collision and before the taxpayer had paid the full amount owing.

Under subsection 281.1(1) of the Excise Tax Act (see also subsection 220(3.1) of the Income Tax Act), the CRA may waive or cancel interest and penalties that have been assessed against a taxpayer. The CRA has published guidelines that describe the circumstances in which the CRA may grant relief (i.e., natural disasters, illness, emotional/mental distress, CRA delay, inability to pay/financial hardship, etc.) and certain factors to be considered on each application (i.e., taxpayer’s history of compliance, existence of unpaid balance, actions taken to remedy the omission, existence of reasonable care/diligence by taxpayer, etc.) (see the CRA’s guidelines here and here).

In Gordon, the CRA had denied the taxpayer’s request for interest relief on the basis that a “wash transaction” existed in this case (i.e., the GST/HST was collected and remitted by the wrong entity within a closely related group of commercial entities or associated persons), and the provisions of GST/HST Memorandum 16.3.1 “Reduction of Penalty and Interest in Wash Transaction Situations” allowed the waiver/cancellation of only that interest in excess of 4 percent.

On the application for judicial review in the Federal Court, the taxpayer argued that it was unfair to charge interest on payments that were at all times in the possession of the CRA, and the CRA had erred in refusing to grant relief. The Crown argued that the CRA had made no reviewable error in the decision, and moreover the decision was reasonable.

In this case, the Federal Court noted the CRA had treated Memorandum 16.3.1 as binding, and as such the Minister had fettered her discretion. The CRA had failed to give any consideration to the taxpayer’s individual circumstances, including his history of compliance, the fact that GST/HST had been remitted promptly, and the error was not the result of any negligence on the taxpayer’s part (in fact, he had relied on professional advice).

The Federal Court granted the taxpayer’s application for judicial review, set aside the CRA’s decision, and returned the matter to the CRA for redetermination in accordance with the Court’s reasons.

The Gordon case is another reminder from the courts that the CRA’s administrative guidelines, while providing “consistency, transparency and fairness in the decision-making process”, are advisory only and the CRA may not rely on such guidelines in a manner that limits the discretion conferred under the statute.

Taxpayers who encounter such a response from the CRA on an application for interest relief may wish to remind the CRA of this important principle, as it has been the subject of several cases in recent years, and the courts have been clear about the role of such guidelines in the decision-making process.

A party may bring an application pursuant to section 18.1 of the Federal Courts Act for review of a discretionary decision of a government board, commission or other tribunal. Generally, the application must be made within 30 days of the decision.

In R & S Industries (2016 FC 275), the Federal Court dismissed a taxpayer’s application for judicial review of a discretionary decision of the CRA because the Court held that the taxpayer had missed the 30-day deadline and no extension of time should be granted.

In R & S, the taxpayer made some errors in a T2059 form in connection with a subsection 97(2) rollover of property to a partnership. The CRA reassessed, and the taxpayer objected.

The CRA Appeals Officer told the taxpayer that an amended T2059 must be filed in order to properly deal with the reassessment. Accordingly, the taxpayer filed an amended T2059 pursuant to subsection 96(5.1) of the Income Tax Act, which allows a subsection 97(2) rollover election to be amended where “in the opinion of the Minister, the circumstances of a case are such that it would be just and equitable” to permit the taxpayer to amend an election.

A CRA officer (other than the Appeals Officer) denied the application under subsection 96(5.1) and various letters were sent to the taxpayer to that effect. The Appeals Officer then confirmed the reassessment on the basis that the taxpayer’s request under subsection 96(5.1) had been denied.

When the taxpayer appealed the reassessment to the Tax Court, the Crown alleged that the Tax Court had no jurisdiction to review the CRA’s decision to reject the taxpayer’s application under subsection 96(5.1) to amend the T2059 because it was a discretionary decision of the Minister of National Revenue and not subject to an appeal to the Tax Court.

The taxpayer then commenced a judicial review application in the Federal Court on the basis that the decision under subsection 96(5.1) was both procedurally unfair and unreasonable. The Crown rejected both arguments and further argued that the application was out of time and no extension should be granted.

In dismiss the taxpayer’s application, the Federal Court stated that it was clear that the taxpayer had missed the 30-day deadline because there had been a lengthy delay from the date of the decision (January 31, 2014) to the filing of the application for judicial review (May 19, 2015).

The Federal Court refused to consider the subsequent correspondence between the taxpayer and the CRA as having created a later date on which the decision was communicated.

The Court did not accept the taxpayer’s argument that the character of the decision as an exercise of Ministerial discretion was not conveyed to the taxpayer until sometime after January 2014. Further, the Federal Court noted that the taxpayer had counsel throughout the process, and counsel was knowledgeable about the CRA’s decision-making process. The Court held that the CRA had no obligation to inform the taxpayer of the availability of judicial review of the discretionary decision.

In respect of an extension of time to file the application, the Federal Court held that the taxpayer had failed to establish that (i) it had a continuing intention to pursue the judicial review application, (ii) no prejudice arose to the Minister of National Revenue, (iii) there was a reasonable explanation to the delay, and (iv) there was merit to the application (see Exeter v. Canada, 2011 FCA 253).

Despite having found that the taxpayer was out of time to pursue a judicial review application, the Federal Court considered the taxpayer’s arguments in respect of the merit of the application, and held that the CRA’s decision was neither unfair nor unreasonable.

The appeal in the Tax Court continues. It is still an open question whether or not the Tax Court has jurisdiction to consider the taxpayer’s arguments regarding subsection 96(5.1) in the context of an appeal of the reassessment.

This case is an important reminder to tax professionals that if the CRA communicates a discretionary decision to a taxpayer, the appropriate relief is sometimes in Federal Court rather than Tax Court. Identifying and quickly responding to those discretionary decisions is key to preserving the client’s right to pursue a remedy.

In McNally v. Canada (National Revenue) (2015 FC 767), the taxpayer brought an application to the Federal Court for an order requiring the Minister to assess his tax return. The Federal Court allowed the taxpayer’s application and ordered the Minister to examine the taxpayer’s tax return and issue a Notice of Assessment within 30 days.

Background

The taxpayer invested funds in a gifting tax shelter in respect of which he claimed a number of deductions.

The taxpayer filed his 2012 federal income tax return in April 2013. Two months later – in June 2013 – he received a letter stating that his return had not been assessed because the CRA was undertaking an audit of the gifting tax shelter program. In July 2013, the taxpayer filed an application for judicial review of the CRA’s decision not to assess his return. Two years later, the taxpayer’s 2012 return still had not been assessed.

Arguments

Under subsection 152(1) of the Income Tax Act, the CRA shall examine a taxpayer’s return of income and assess the tax for that taxation year “with all due dispatch.”

The taxpayer argued that the CRA was deliberately delaying the assessment for the improper purpose of discouraging participation in gifting tax shelters. The court noted that, in the CRA’s view, widely-marketed tax shelters are generally invalid. In this case, the CRA admitted that it chose not to assess the tax returns of participants in the gifting tax shelters in order to discourage participation in such investments, to undertake an audit the tax shelter, and to educate the public about gifting tax shelters.

The CRA admitted that the main reason the taxpayer’s return was not reassessed was to discourage participation in gifting tax shelters. The CRA submitted that this motive did not conflict with its duty under subsection 152(1) of the Act.

Analysis

In allowing the application, Justice Harrington of the Federal Court followed the decision in Ficek v Canada (Attorney General) (2013 FC 502) in which the Court held that the Minister had failed to assess the taxpayer’s return “with all due dispatch.”

In Ficek, a delay in examining the taxpayer’s return arose from a new policy of discouraging certain types of tax shelter investments. In Ficek, the court acknowledged that the CRA has discretion in assessing taxpayers but noted “…the discretion is not unfettered, it must be reasonable and for a proper purpose of ascertaining and fixing the liability of the taxpayer” (para. 21). Importantly, the Court held that there should be some certainty to the taxpayer’s financial affairs (para. 34).

In McNally, Justice Harrington followed this reasoning. He held that the phrase “with all due dispatch” does not imply a specific time period before which the Minister must make an assessment. However, he found that while the Minister has discretion, it is not unfettered. The determination of whether the Minister has examined a taxpayer’s return “with all due dispatch” is a question of fact.

The Federal Court ultimately determined that the Minister had failed to assess the taxpayer’s tax return “with all due dispatch.” The court held:

[41] … Although the Minister is responsible for administrating the Income Tax Act, ultimately it falls upon the courts to decide whether a claimed deduction is valid or not. It is plain and obvious that Mr. McNally’s rights have been trampled upon for extraneous purposes.

[42] The Minister owes Mr. McNally a statutory duty to examine his return “with all due dispatch.” There may well be circumstances in which it will take some time to reach a conclusion with respect to a given return. It may well be appropriate to await the audit of third parties. However this is not one of those cases.

[43] The CRA is entitled to express concerns with respect to certain shelters and to warn that such shelters will be audited. In Mr. McNally’s case, however, the resulting delay is capricious and cannot be allowed to stand. Even assuming these secondary purposes to be valid, they are overwhelmed by the primary main purpose and cannot save the day.

Interestingly, McNally goes a step further than the Court in Ficek, in which the Court had simply declared that the CRA had failed to assess with all due dispatch. McNally is a good example of the Federal Court exercising its judicial review authority to compel the CRA to carry out its statutory duty. This does not assure the taxpayer that he is entitled to his charitable donation claims, but at least he will be able to commence a challenge of the disallowance of the claims.

While the McNally decision does not go so far as to tell us what “with all due dispatch” means, the decision is the second important reminder that the CRA’s discretion in assessing taxpayers, while broad, is not unfettered.

ConocoPhillips had commenced an application for judicial review as a result of a dispute between the CRA about whether a Notice of Reassessment had been validly sent to the taxpayer. The CRA alleged that it mailed a Notice of Reassessment on November 7, 2008. ConocoPhillips alleged that it never received the Notice of Reassessment and that it first learned of the reassessment on April 14, 2010.

Accordingly, when ConocoPhillips filed a Notice of Objection on June 7, 2010, the CRA advised that it would not consider the objection on the grounds that it was not filed within 90 days of the alleged mailing date (i.e., November 7, 2008) and that no request for an extension of time was made within the year following the alleged mailing date of the reassessment.

The Federal Court considered the question of jurisdiction and found that it had jurisdiction because the Court was not being asked to consider the validity of the reassessment (which can only be determined by the Tax Court of Canada) but rather, was only being asked to review the CRA’s decision not to consider the objection.

Based on the standard of reasonableness, the Federal Court found in favour of ConocoPhillips on the basis that the CRA had not sufficiently engaged the evidence to appropriately render an opinion whether or not the reassessment was mailed on the alleged date. The Court set aside that decision.

The Crown appealed to the Federal Court of Appeal on the basis that the Federal Court lacked jurisdiction on this issue. The Federal Court of Appeal allowed the appeal.

Section 18.5 of the Federal Courts Act provides that judicial review in the Federal Court is not available where, inter alia, an appeal is permitted on the issue before the Tax Court of Canada. In the present case, the Federal Court of Appeal stated that, pursuant to subsection 169(1)(b) of the Income Tax Act (Canada), ConocoPhillips could have appealed to the Tax Court after 90 days had elapsed following the date its objection was initially filed and the Tax Court would have been the correct forum to determine if, or when, the Notice of Reassessment was mailed and when the time for filing a Notice of Objection expired.

The Federal Court of Appeal clarified that the Minister’s obligation to consider a Notice of Objection is triggered regardless of whether a Notice of Objection may have been filed within the required time-frame. Further, the Minister’s decision on this issue is not an impediment to filing an appeal to the Tax Court pursuant to paragraph 169(1)(b) of the Income Tax Act (Canada). Accordingly, judicial review of this issue was not available in the Federal Court.

The Canada Revenue Agency had an important win this week in its efforts to access information outside of Canada. On March 20, 2013, the Federal Court issued its decision in Soft-Moc Inc.v. M.N.R. 2013 FC 291, dismissing Soft-Moc’s judicial review application to have the CRA’s decision to issue a Foreign-Based Information Requirement set aside or varied.

The CRA has broad powers to access information related to the determination of a taxpayer’s tax obligations. Under subsection 231.6 of the Income Tax Act, these powers include the issuance of a Foreign-Based Information Requirement to obtain information or documents located outside of Canada.

In Soft-Moc, the CRA was conducting a transfer pricing audit and sought information from corporations in the Bahamas who provided services to Soft-Moc. These corporations and their individual Bahamian resident shareholder owned 90% of the common shares of Soft-Moc. The CRA issued a Foreign-Based Information Requirement to Soft-Moc under subsection 231.6(2) of the Income Tax Act.

The Requirement requested substantial amounts of information related to the Bahamas Corporations including extensive details of the services provided, customers, financial statements, costs and profits and employee data. Soft-Moc applied for judicial review of the decision to issue the requirement.

Primarily, Soft-Moc argued that the information requested went well beyond that necessary to enable the CRA to complete the transfer pricing audit and that the decision to issue the requirement was, therefore, unreasonable. Soft-Moc argued that a portion of the information requested was irrelevant and that some portions were confidential or proprietary.

The Court was not sympathetic to Soft-Moc’s arguments, noting the wide-ranging statutory powers of the CRA to collect information and the low threshold to be met in determining whether the requested information is relevant and reasonable.

On February 21, 2013, the Federal Court of Appeal released two decisions related to the obligations of the Minister of National Revenue when making ex parte applications under subsection 231.2(3) of the Income Tax Act (the “Act”) for judicial authorization requiring taxpayers to produce certain information and documents relating to customers. In Minister of National Revenue v. RBC Life Insurance Company et al., 2013 FCA 50, the FCA affirmed the decision of the Federal Court (reported at 2011 FC 1249) cancelling four authorizations issued by the Federal Court in relation to customers of the Respondent companies who had purchased a particular insurance product that has been described as “10-8 insurance plans”. In Minister of National Revenue v. Lordco Parts Ltd., the FCA adopted its reasoning in RBC and again affirmed a judgment of the Federal Court cancelling an authorization that had required information in respect of certain employees of the Respondent.

In both cases, the FCA reaffirmed the Minister’s “high standard of good faith” and the powers of the Federal Court to curtail abuses of process by the Crown.

In RBC, the Minister argued that the facts that it failed to disclose on its ex parte application before the Federal Court were not relevant to the applications. Reviewing the judgment of the Federal Court, the FCA concluded that the Minister failed to disclose the following facts:

The Department of Finance’s refusal to amend the Act;

Information in an advance income tax ruling;

CRA’s decision to “send a message to the industry” to chill the 10-8 plans; and

The GAAR committee had determined the plans complied with letter of Act.

The FCA held that the Federal Court’s finding that these facts were relevant was a question of mixed fact and law and the Minister had not demonstrated palpable and overriding error by the Federal Court judge. At a minimum, this suggests the Crown may have to disclose information of the sort included in the enumerated list. Examining that list is interesting and suggests a requirement to include in the disclosure to the Federal Court judge hearing an ex parte application facts related to legislative history and intent including discussions about potential problems and possible legislative “fixes”, internal analysis of issues within the CRA including other advance income tax rulings, motivations on the part of the CRA and its officers and agents that may extend beyond auditing the particular facts, and previous analysis of the facts known to the CRA and indications that those facts might support compliance with the Act and inapplicability of the GAAR. That is a very extensive list, and it is encouraging to know that Crown obligations extend into each of these areas.

Further, the FCA held that even if the Federal Court on review of an ex parte order determined that the Minister had a valid audit purpose, it was open to the Federal Court to cancel the authorization based on the Minister’s lack of disclosure. Somewhat surprisingly, the Minister argued that section 231.2(6), unlike section 231.2(3), did not allow for judicial discretion. Once the statutory conditions are established, the Minister argued, the Federal Court judge MUST NOT cancel the authorizations, no matter how egregiously the Crown acted. The FCA rejected this argument, reaffirming the importance of judicial discretion and the duty of the Minister to act in good faith:

[26] In seeking an authorization under subsection 231.2(3), the Minister cannot leave “a judge…in the dark” on facts relevant to the exercise of discretion, even if those facts are harmful to the Minister’s case: Derakhshani, supra at paragraph 29; M.N.R. v. Weldon Parent Inc., 2006 FC 67 at paragraphs 153-155 and 172. The Minister has a “high standard of good faith” to make “full disclosure” so as to “fully justify” an ex parte order under subsection 231.1(3): M.N.R. v. National Foundation for Christian Leadership, 2004 FC 1753, aff’d 2005 FCA 246 at paragraphs 15-16. See also Canada Revenue Agency, Acquiring Information from Taxpayers, Registrants and Third Parties (issued June 2010).

The Minister’s argument, the FCA held, also runs contrary to the inherent power of the Federal Court to “redress abuses of process, such as the failure to make full and frank disclosure of relevant information on an ex parte application” (para 33):

The Federal Courts’ power to control the integrity of its own processes is part of its core function, essential for the due administration of justice, the preservation of the rule of law and the maintenance of a proper balance of power among the legislative, executive and judicial branches of government. Without that power, any court – even a court under section 101 of the Constitution Act, 1867 – is emasculated, and is not really a court at all. (para 36)

Overall, the RBC decision strongly reaffirms the role of the Federal Court in ensuring the Minister acts in good faith when making ex parte applications. Given the broad powers granted in subsection 231.2(3) and elsewhere in the Act, it is reassuring to know that the Courts can, and will, protect taxpayers and citizens generally by ensuring that the CRA puts all relevant information before the Court when it seeks to exercise those powers.

By way of background, the case concerned insurance products known in the industry as 10-8 plans. These essentially were a tax-effective insurance structure where, in very general terms, the taxpayer paid a high rate of deductible interest on loans in connection with insurance products where relatively high rates of interest accrued free of tax. The Canada Revenue Agency was aware of these structures at the highest levels and the record disclosed that they had considerable concern that the structures were abusive, violated GAAR, etc. As a result, CRA made ex parte applications under subsection 231.2(3) of the Income Tax Act against a number of the issuers of such 10-8 plans requiring the production of detailed information about these plans and their customers.

What CRA did not disclose to the Court on these ex parte applications was that one of the principal purposes of these applications was to take measures to “chill” 10-8 plan business. This offended the Court:

[58] At the hearing, the Insurers conceded that the Minister had a valid audit purpose in issuing the requirements, but argued that this valid purpose was extraneous to her primary goal, which was to chill their 10-8 plan business. I agree.

[59] I do not believe that the Minister’s central purpose in issuing the requirements is sufficiently tied to her valid audit purpose. Contrary to the Minister’s pretension, I did find evidence that the targeted audit of specific 10-8 plan holders was not only done to test the reasonableness of the 10% payable interest rate or the possible application of the GAAR but to send a message to the industry. I am not satisfied that the Minister’s attempt to “send a message” is a valid enforcement purpose such that subsection 231.2(3)(b) of the Act is satisfied or that this goal is sufficiently connected to the Minister’s valid audit purpose.

The Federal Court’s decision is a refreshing affirmation of the Crown’s duty of fairness and candour, particularly in ex parte proceedings. The decision should encourage those in receipt of “unnamed persons” requirements to challenge such requirements with a view to ascertaining whether the facts put forward by the CRA on the ex parte application to obtain the order constituted a “full and frank” disclosure of all the relevant facts.

On October 21, 2011, the Federal Court (Justice Sandra Simpson) released her decision on an application for judicial review in Dolores Sherry v. The Minister of National Revenue. The applicant requested judicial review pursuant to section 18.1 of the Federal Courts Act of a decision of the Canada Revenue Agency (“CRA”) in which the CRA refused to cancel or waive interest and penalties related to the applicant’s taxes for 1989 to 2000. The decision is important because the Federal Court held that the reasons provided to the applicant by the CRA were inadequate.

The applicant had sought judicial review of the refusal by the CRA and on October 25, 2005, the Minister commenced a review of the applicant’s file in accordance with the terms of an order by Justice Heneghan on April 25, 2005. Justice Heneghan made an order on consent referring the matter to the Minister for redetermination. Upon completing its redetermination, the CRA told the applicant that it declined to reduce the interest charged to the applicant from 1989 to 2000 for the following reasons:

In reviewing your financial circumstances, we conducted a cash flow analysis to determine your ability to meet your tax obligations from 1989 to 2000. In conducting this analysis we have applied the direction in the Court Order and excluded the $100,000 you reported as taxable capital gain in our cash flow analysis and included your rental loses for years 1989 to 1994 as cash outflow. Our cash flow analysis shows that your net cash flow (funds received less expenses paid during the applicable years) was sufficient to meet your tax obligations from 1989 to 2000, except for the negative cash flow years 1991, 1992, and 1993. However, we considered the fact that you had significant equity in properties that you owned during the years 1991 to 2000 and could use this equity to meet your tax obligations and to cover the negative cash flows. Therefore, your request for interest relief under financial hardship is denied.

Justice Simpson held that those reasons were inadequate as CRA “extrapolated” from her income and expenses in 2001 a cash flow summary for the years 1989 to 2000 and CRA relied, in part, on its own appraised value of the applicant’s properties when it considered whether she had equity in her real estate holdings.

Justice Simpson concluded that although the CRA’s decision, as originally communicated to the applicant, did not offer adequate reasons, a more detailed “Fairness Report” prepared by the CRA did provide an adequate explanation. Although, by the time of the hearing, the applicant had a copy of the “Fairness Report”, she was not given a copy when the CRA first told her about its decision. Therefore, the application for judicial review was allowed.

As the applicant was required to initiate a judicial review application before she received the “Fairness Report”, the Court granted her costs for the preparation of the application. Once the “Fairness Report” was secured by the applicant, the only issue on which the applicant was successful was resolved and therefore, no relief beyond the cost award was granted.

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